September 9, 2013

Money Laundering

Money laundering is imaginatively defined as washing of money acquired through illegal means. Some of the sources of dirty money are corruption, rubbery, and the likes. Dirty money is being laundered in order to be clean before being deposited in banks. Money launderers use laundry channels such as investments (stocks, real estate, and the likes), businesses, and other institution not covered by Anti Money Laundering Actions (AMLA) in cleaning dirty money.

Despite the rules and regulation imposed by Central Bank relative to money laundering; detecting it is quite hard. For example, dirty money was invested in a private business; as a result the said business expanded and in turn increased its sales – the sales were then deposited in the banks. Because the money came from a legitimate source the banks accepted it.

The above paragraph implies that prevention of money laundering should not only be the responsible of the banks. It is then recommended to create a special auditing division that would check the asset and liabilities of the persons possibly accounted to money laundering. Investment institutions and businesses are also encouraged to practice AMLA.

2 comments:

Some money launderers distribute their dirty money to different people, like family members, to clean the money and be deposited to banks; others create fictitious online business and claim that the money was income from internet business. I suggest that all money channels be reviewed and have proper checkpoints.

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